There are several components that make up pipeline operational costs. Generally, the main operational cost of a mineral or tailings slurry pipeline is the pumping energy needed to keep product flowing, followed by spare parts and labor costs. Other important considerations for selecting the transportation alternatives include the initial deployment of CAPEX and OPEX.
It is very important to consider the operational costs of a project’s transportation component when selecting the most suitable ways and means of transporting a product to market. Choosing a transportation system with a relatively low capital costs and high operating costs, which can heavily escalate over time, can be costly to the business in the future.
Energy Consumption
A pipeline’s total energy consumption depends on product lift or fall and the resulting frictional loss within the pipe. Depending on the pipeline route, gravity can provide much of this transport energy, resulting in no demand for pumping energy.
In Brazil, the most common form of energy consumption is a combination of gravity and pumping, depending on the transportation route. In the Andes region of South America where slurry transport begins at 3,000 to 4,000 meters above sea level and ends in coastal regions, very little or no pumping power is necessary. In flatter terrain such as Minas Gerais, Brazil, energy consumption needs can account for 60 to 70% of system operating costs. Generally, much of the electrical supply for transporting mineral concentrate via pipeline in Brazil comes from lower-cost, renewable, hydro-electric sources.
The difference in energy consumption costs when transporting slurry along steep vs. flat routes illustrates the importance of having adequate control of this input. In the right physical environments, pipelines can provide a less costly, more environmentally friendly alternative to other transportation options. A hypothetical iron concentrate pipeline provides a practical energy consumption case in point. If a slurry pipeline were to originate somewhere in the iron quadrilateral zone in Minais Gerais and terminate at a point along the southeast coast of Brazil, what would the energy consumption be per ton or iron concentrate transported? The answer depends on several factors; however, given a transport capacity of 20 million tons per year, the energy consumption for this pipeline would represent approximately US$ 0.55 per ton transported – much less than $1 per ton.
Spare Parts and Labor
Pipeline equipment is highly operational: spare parts consumption typically falls below the mineral sector’s norm at 3% of equipment cost. In addition, most parts are nationally available, thereby minimizing international demand.
Pipelines do not require a large labor pool. A reduced number of staff are needed during a pipeline’s operational phase relative to other transportation modes, resulting a significant cost savings. For example, a large, 500-km pipeline with two pump stations would require only about 120 workers for operation.
Although fewer workers are needed to operate a pipeline, some specialist staff members would be required including technicians with expertise in hydraulics and pumps. Also, since pipeline equipment is generally differentiated, maintenance of positive displacement pumps requires specialised training.
Engineering Design and Maintenance
Carefully selecting an engineering company with a strong project track record and long history of successful projects is undoubtedly the best way to protect a project’s bottom line while mitigating project risk. Sometimes, decisions to save on engineering costs during design and construction (averaging between 4% and 5% of project’s total value) can result in higher operational costs later on. Choosing an experienced engineering firm capable of accurately forecasting energy consumption requirements will help reduce project costs – and risk – over the entire life cycle of a project. Engineering costs do not represent a significant additional cost in the overall investment picture of a project, and yet a good engineering partner can help a client reduce project, environmental, and budgetary risk. Post-construction, a well-structured, well-planned maintenance program will enable most slurry pipelines to remain approximately 98% operational.
No other transportation alternative can match the operational productivity of a pipeline. Compared to other transportation options, which have higher operational risks and costs, slurry pipelines have become the preferred transportation option for many producers. For good reason – pipelines have been operating in Brazil for more than 35 years with very few reported accidents or personal injuries.